Germany and France are reportedly seeking a further relaxation of the European Union’s proposed CO₂ rules for new cars, in a development that could allow more vehicles with combustion engines and other powertrains to be sold after 2035.
According to reports from German media outlets including FAZ and Handelsblatt, German Chancellor Friedrich Merz and French President Emmanuel Macron have reached broad agreement on the issue. In return for France supporting greater flexibility on vehicle CO₂ targets, Germany would reportedly back stricter “Made in Europe” requirements under the EU’s planned Industrial Accelerator Act.
No formal agreement has been concluded, and further negotiations are continuing.
EU Automotive Package Already Proposes 2035 Flexibility
The European Commission presented its Automotive Package in December 2025 as a framework to provide additional flexibility to automakers while maintaining the EU’s broader transition toward zero-emission mobility.
Under the Commission’s proposal, manufacturers would face a 90% reduction in fleet-wide tailpipe CO₂ emissions from 2035 compared with the 2021 reference level. The remaining 10% could be addressed through compensation mechanisms involving low-carbon steel produced in the EU, e-fuels and biofuels.
The proposal would therefore allow plug-in hybrids, range-extender vehicles, mild hybrids and internal combustion engine vehicles to continue playing a role after 2035, alongside fully electric and hydrogen vehicles.
The legislation currently in force, however, still establishes a 100% reduction target from 2035. Any change would therefore require the proposed revision to complete the EU legislative process.
Germany and France Reportedly Seek Greater Flexibility
The reported Franco-German position would go beyond the Commission’s current proposal.
According to Handelsblatt, Germany and France are seeking an additional 10-percentage-point relaxation without compensation mechanisms. With compensation options included, the reduction could reportedly be set at 80% or lower.
The two governments are also reportedly discussing greater flexibility around the interim 2030 target. Under the Commission’s proposal, manufacturers would be able to use a banking-and-borrowing mechanism over the 2030–2032 period rather than being assessed against the target on a single-year basis.
The reported Franco-German position would extend this flexibility further, potentially reducing the risk of immediate financial penalties for manufacturers that do not meet the target in an individual year.
Germany Could Support Stricter European Content Rules
The reported agreement would also involve industrial policy.
France has supported tighter “Made in Europe” requirements under the proposed Industrial Accelerator Act, while Germany had previously taken a more moderate position that could include certain trading partners.
Under the reported compromise, Berlin would move closer to the French position on European content requirements in exchange for greater flexibility on automotive CO₂ rules. European policy sources described the discussions as ongoing rather than a completed agreement.
Small Electric Cars Could Receive Additional Credits
The Commission’s existing proposal includes measures intended to encourage the development and sale of smaller electric vehicles.
Under the proposed “super credits” system, electric cars shorter than 4.20 metres and produced in the EU would receive greater weight when calculating a manufacturer’s fleet emissions.
The mechanism is intended to provide additional incentives for manufacturers to introduce smaller and more affordable electric models.
Company Car Electrification Also Included
The Automotive Package also proposes national targets for the electrification of corporate vehicle fleets from 2030.
Member states would determine how to implement the requirements domestically. The Commission has cited Belgium’s company-car taxation system as an example of a policy framework that has contributed to higher electric vehicle uptake.
The package also proposes changes to CO₂ rules for heavy-duty vehicles, providing additional flexibility for manufacturers in meeting their 2030 emissions requirements.
EU Legislative Process Remains Ongoing
The reported agreement between Germany and France would not by itself change EU legislation.
The Commission’s Automotive Package must pass through the European Parliament and the Council of the European Union. Negotiations can result in changes to the Commission’s original proposal before final legislation is adopted.
The reported Franco-German position could influence those negotiations because Germany and France are among the EU’s largest automotive markets and industrial economies. However, other member states and political groups will also have a role in determining the final text.
The existing EU framework continues to target a 100% reduction in fleet-wide CO₂ emissions for new cars and vans from 2035 until any legislative revision is formally adopted.
